ITC extension could boost solar deployments by 44% over the next decade, report finds

Solar deployments in the U.S. could increase by 44% over the next decade if Congress chooses to fully fund and extend the investment tax credit, a new report finds.

The report by Wood Mackenzie assesses the impact of the proposed ITC extension within the budget reconciliation package, which includes $555 billion for clean energy. The tax credit alone, however, will not be enough to reach 80% carbon-free electricity by 2030, according to the analysis.

If approved, the U.S. will add 432 GW of solar capacity by 2030, versus 300 GW in the base case outlook. While utility-scale solar sees the largest increase — 51% — distributed solar would experience a substantial boost, as well, with residential solar capacity increasing 31% and non-residential solar increasing 14%. This segment will benefit significantly from direct pay provisions within the budget reconciliation package.

The solar outlook remains limited by supply chain constraints, as well as interconnection delays, the authors wrote.

In September, a coalition of more than 50 environmental, renewable energy, and transportation groups called on Congress to include long-term clean energy incentives in the budget reconciliation package.

“While there are additional incentives for grid modernization and transmission capacity in both the infrastructure bill and budget reconciliation package, these projects take years to complete,” Sylvia Leyva Martinez, a senior analyst at Wood Mackenzie, said. “Extending the ITC will certainly expand deployments, but not enough to hit President Biden’s goal of 80% carbon-free electricity by 2030. Rather, our analysis indicates cumulative installed solar capacity will reach 528 GWdc by 2030, about 26% lower than the 714GWdc  (525 GWac) called for by the Solar Futures Study.”

In total, the latest ‘Build Back Better’ budget reconciliation framework stands at $1.75 trillion, with $555 billion for the climate and clean energy — the largest investment ever by Congress. Reports indicate, however, that the deal isn’t done yet, and negotiations are still taking place.

“This framework also makes the most significant investment to deal with the climate crisis ever, ever happened — beyond any other advanced nation in the world,” President Biden said in remarks about the framework. “Tax credits to help people do things like weatherize their homes so they use less energy, install solar panels and develop clean energy products, and help businesses produce more clean energy.

“And when paired with the Bipartisan Infrastructure Bill, we will truly transform this nation.”

Progressives in Congress have pushed back on approving the $1.2 trillion bipartisan infrastructure bill until after specifics of the budget reconciliation bill — with all of its investments in the climate and clean energy — are agreed upon.